Financial Advice: Two things every couple must discuss before and after getting married
If you follow me on Instagram you may have seen me share that my brother is a Financial Planner. He’s helped me, my parents, family and friends—he’s the only person I trust when it come to my finances. Financial planning for myself has also been one of the best things I’ve done for my future, all thanks to my brother. Since financial planning is also one of those topics I believe (and have seen) most couples struggle navigating, I asked him to share a little bit of his expertise here as a guest blogger. Because why not share something you love, trust and that’s worked for you with the world, right?
If you’d like to reach out to my brother, you can contact him directly through his website or through his Facebook page. As a side note, I am not being compensated, paid, sponsored or receiving any shape/form of monetary benefit through this post—at all. I’m simply sharing something and someone that I trust and that you can trust, too.
I fell in love with my wife 7 years before we married each other. We met during an interesting time in my life. Six months prior to meeting her, I promised myself I would remain single for two years! Well, that sure didn’t last long. I was star-eyed when I met her. Her beautiful emerald eyes are what got me. We hit it off instantly and began dating. Our love grew more over time. Although it took me a while to get around to proposing, I did eventually, and we got married in the summer of 2018.
Our wedding was the happiest day of my life. The love we have for one another has reached a level I like to call, “matured simplicity.” Sure, we have moments where we can’t be in the same room, but we always find humor and never go to sleep without telling each other, “I love you.” More importantly, we have gotten very good at communicating. Communication is a key recipe for a happy marriage, I am sure you’ve heard that before. I want to discuss the importance of communication around finances.
It has also been 7 years since I started my financial planning practice. I work with families and business owners with their finances. Most of my clients are married. Many of them are very successful, and I have found communication to be the single most important thing that contributes to their happy marriages and finances. Shocker, right? Now, would you be surprised if I told you it takes hard work and commitment to maintain good communication? Probably not. Most people think infidelity is the number one reason for divorce, but it’s not. Many articles on this topic point to lack of communication. Finances are one of the top 10 reasons for divorce, and it is not because of a lack of finances.
They say opposites attract, and while this is true for love it is not so true for finances. Couples who aren’t married usually don’t have much of a reason to talk about finances, so there would be no way of knowing if you had differences. Even after you get married, without the “money talk”, it could take years before signs of differences begin appearing. After some time, if the conflict is not resolved, romance declines and divorce seems like the best solution. Let’s not get there. If you are planning on getting married, or recently got married, there are two very important things you should do:
1) THE “MONEY TALK”
If you have not done so already, begin conversations about the financial partnership you are or will be starting as a married couple. Be open and honest about your finances, dreams, goals, spending habits, and attitude towards debt. Sure, not all these topics will be easy to discuss. Boy oh boy, let me tell you! It is one thing to tell other people to do this, and another to do it yourself. It took my wife and I 3 different attempts to get through this discussion. Things came up that caught us by surprise, but we got through them. Here are the topics you should discuss:
What assets will you bring into the marriage?
What debts will you bring into the marriage? How did you get them? What is the balance, interest, and monthly payments? What are you doing to pay it off?
Do you consider yourself a saver, spender, or something in between?
What is your credit score?
What is your income? If you own a business, explain how your income works.
What are your financial goals, short, mid, and long-term?
What are your feelings regarding financial responsibilities to other family members, such as aging parents or children from a previous relationship?
How will you manage your money once you’re married? Join, separate, or combination of accounts? Who will be responsible for managing the financial plan and paying household expenses? How often will you meet to discuss finances and status on goals?
If only one of you works outside the home, who will control the money in the relationship? Is it important to have transparency? If so, how can you accomplish that?
If you have plan to have children, what are your financial expectations regarding raising children? Will one of you stay home to care for the child(ren)?
Do either of you need to keep a portion of your financial life separate? If so, can you both agree to that?
To start, my advice to you is to schedule some time with your partner to have this in-depth conversation. Maybe a Saturday morning after breakfast. Try to commit to one or two hours. If that sounds like too much, think about this: we can spend hours planning a vacation, why not spend a little time planning and talking about the rest of your lives? Also, make sure to write some of these things down because you will need them later.
If one of you is a saver, and the other a spender, I have some suggestions. To the saver, I would say do not be a push over, and do not be pushy. Be patient, but persistent. To the spender, I would say it is difficult to make some changes because it may feel like you are losing control. If you want a happy and healthy marriage, you will find a way to compromise. No one should feel like they are losing or gaining control over anyone else. We all have needs, and I am confident you can find a plan that works for you both. The most important thing is to LISTEN to each other! No one ever learned anything from hearing themselves speak.
2) POST WEDDING FINANCIAL PLAN
One of the best things you can do to try to prevent any future problems from occurring is by discussing them now. While the “Money Talk” allows for you to gain valuable insight, you may not figure out what you are going to do. Planning for finances is tough when you’re busy planning for a wedding. It is great to talk about goals and dreams, but they mean nothing if you do not set a plan to achieve them. To do this, you have two options: 1) Do it yourself, 2) Hire a professional. Some people cannot afford my services so they decide to start off on their own until they can afford to delegate the work to someone else. That is perfectly fine. Those who decide to hire a professional typically do it because they simply do not have time to do the work that needs to be done. Here are some basic steps to help you do it on your own:
Define your budget: Your budget should be realistic. Don’t make it so rigid that it does not allow for unexpected expenses. Decide how expenses will be paid (joint or separate). For example, my wife and I pay everything out of our joint account. I keep a business account for business related expenses, but that’s it. Nothing wrong with separate accounts, it is just less transparent.
Establish an emergency fund goal: How much money do you need in savings to feel comfortable about covering unexpected costs in the near future? Decide on the number together. If you have that saved already, that’s great. Decide what to do with the rest. In other words, give the excess money a purpose and put it in an account that will help you with that purpose.
Pay off debts quickly: It is difficult to pay off debt if you do not have savings. Most people who remain trapped with debt fall into a pattern of paying down debt and then using credit again to pay for unforeseen expenses. Avoid temptation to use credit. This is easier to do if you have savings built. Once you have savings, then shift your discretionary income towards the debt with the highest interest rate.
Manage risks: Review your insurance coverage. Do you have adequate insurance for your cars, your home or apartment? Don’t forget to ensure that expensive ring! How will your finances be affected if either of you passed away premature? Do you have enough life insurance? Can you still afford to pay the bills if either of you lost the ability to work? Are you prepared to pay the cost of your health insurance plan deductible? Do you have full understanding of the benefits available through your employer?
Plan your goals together: If your goal is to buy a home, you should discuss how much money you will need to make that happen. Set a timeline and remember to not put all your savings on the home as that could leave you financially vulnerable. What about retirement? How much money do you need for retirement and how will you get there?
Commit to ongoing money conversations: I meet with my clients at least once per year to review their financial plan. You should do the same. Commit to meeting at least once per year to review everything. You can meet more often to discuss specific areas of your plan and make tweaks along the way.
So, there you have it! My wonderful sister, Rosa Delgado, asked me to write a blog and instead I wrote a lengthy article. Sorry!
In any case, I did not want to leave you all hanging and thought it would be helpful if I could share some topics and ideas to help you get started on your own. When you do get started, remember why you both love each other. Keep the romance strong. Make decisions together. Include one another whenever it comes to finances. You are a team, and together you can accomplish amazing things. It starts with having excellent communication. I know you can do it! Cheers to you and your amazing relationship.
DISCLOSURE: Miguel Delgado is Registered Representatives and Investment Advisor Representatives offering securities and investment advisory services solely through Ameritas Investment Corp. (AIC). Member FINRA/SIPC. a registered broker/dealer and registered investment advisor. AIC, Miguel Delgado or David White and Associates are not affiliated. Additional products and services may be available through Miguel Delgado or David White and Associates that are not offered through AIC. Representatives of AIC do not provide tax or legal advice. Please consult your tax advisor or attorney regarding your circumstances. Information provided is gathered from sources believed to be reliable; however, we cannot guarantee their accuracy.